A new loan product for the California market is offering jumbo financing with reduced down payment requirements and 30-year fixed terms. Typically, most jumbo loans (those exceeding the high balance limit of $625,500 that is extended to high cost counties) require 20% equity as collateral to secure financing. Very few lenders have offered jumbo financing beyond the 80% threshold and, of those that have, consideration has been limited to Adjustable Rate Mortgage (ARM) loans with fixed periods of between 3 and 5 years.
This new jumbo product offers loans up to$850,000 with down payments of just 10%, supporting a purchase price of $944,444. Financing of up to $1,000,000 is available to 85% of purchase prices as high as $1,176,450. Credit score requirements are fairly liberal with scores as low as 680 permitted. Loan reserve requirements are nine months of the combined monthly total of principal, interest, and prorated monthly mortgage insurance, property taxes and hazard insurance.
Here are a few highlights of this new product:
· 90% financing on loans up to $850,000 with credit scores of 680.
· 85% financing on loans up to $1,000,000 with credit scores of 700.
· 30 and 15-year fixed terms available.
· Mortgage insurance is required.
· Single-family homes, warrantable condominiums, townhouses, mixed use properties, and rural properties with up to 15 Acres are all allowed.
· Available for U.S. citizens, permanent resident aliens, and first time homebuyers.
· Recently listed properties are OK.
· Gift funds are not permitted.
· Business funds may be used for self-employed borrowers owning 100% of the business.